INVESTMENTS

YogaWhat Is Asset Allocation?

Asset allocation is an investment strategy, which tries to balance risk against reward by adjusting the percentage of each individual asset in the investment portfolio to suit the client's tolerance to risk, the length of time they anticipate holding the investments, and what their life goals are.

With asset allocation we therefore concentrate on the overall portfolio of investments, rather than any individual investment. The basis behind the asset allocation strategy is that by balancing the portfolio using diverse classes of assets - stocks, bonds, cash, commodities, venture capital, amongst others - we are balancing the risks to the client's tolerances, but importantly, we are able to predict from other investors who have invested in the same asset classes, how the portfolio is likely to perform, irrespective of the individual investments any one client has made.

A great analogy of this is that whether you were to move to London from Bristol, the weather is unlikely to differ that much between each place in any given period. In either place you are living in the temperate climate of southern England - and not in the cold of Siberia. If London and Bristol were compared to different investments in the same asset class, their performance would be expected to be very similar, where as Siberia would be seen as being a very different asset class which performs totally differently.

From this analogy we can see that predictable results can be achieved by asset allocation through the balancing of asset classes to suit the client's risk tolerance.

Asset Allocation Based On Client Goals

When it comes to building an investment portfolio, some individual investors focus on selecting the right fund manager or fund. At MaxLyte Financial, we believe that this is only a small part of the portfolio construction process. Our starting point is ‘asset allocation’, based on the client's goals and risk tolerance for each of their goals. We populate the agreed asset allocation, with the very final step being the fund manager selection.

Wherever it is suitable, we integrate asset allocation with with our Life Planning Service, which looks to establish the client's true goals and aims in their life, so enabling us to match investments to suit their ultimate goals.

Asset Allocation – We Focus On Risk and Return

Historical data tells us that when it comes building a portfolio that it is asset allocation that is the most important decision. Ensuring that the portfolio has the best blend of assets to match our clients individual circumstances, investment aims and attitude to risk.

We become a 'Behavioural Mentor' to our clients, ensuring that they do not become influenced into making emotional decisions and ensuring that their investment aims have the right asset mix to exactly match their attitude to risk.

We use the core-satellite approach which means that a large part of the portfolio is invested in index funds to capture the market return.

Our clients get constant access to their investment valuation as soon as it is invested and can monitor it 24 hours a day, 7 days a week.

Contact Us To Find Our More About Asset Allocation And Our Investment Services